ISIS Likely to Increase Kidnappings As Oil Money Dries Up

Smoke raises behind an Islamic State flag after Iraqi security forces and Shiite fighters took control of Saadiya in Diyala province from Islamist State militants, November 24, 2014. Stringer/REUTERS

The Islamic State could step up its kidnapping operations to raise funds, following the loss of control of three oil fields in Iraq, according to security analysts.

A report in a German newspaper Sueddeutsche Zeitung last week cited a German security services document which said that ISIS now only has 5% of its previous oil extraction capabilities after losing control of oil fields in the country.

The loss of revenue will hit ISIS hard, and result in the group looking to raise funds through other avenues according to Colin Clark from the RAND corporation, a thinktank which provides analysis to the U.S. military.

"It's a rich terrorist group but it's a poor state," he says. "Without this oil money they are going to have to maybe rethink some of the state building efforts that have been fairly ambitious up to this point."

"What the really interesting part is, with this loss of oil revenues the group is likely to turn to other money makers that it's good at, and that includes both kidnapping for ransom and extortion."

Clarke also says that the group might have to turn on the population under its direct control and extort funds out of them.

"This is good for the international community on two fronts. One, taking away the oil fields takes away the money, but two, taking away the oil fields which takes away the money causes the group to go find it in other ways which are detrimental to its own cohesions. It turns from a protector to a predator."

He explains that the group could well begin using criminal gangs to carry out kidnappings in cities, smuggle the victims into their controlled territory and then try to sell them for a profit.

"We see this phenomenon happening in Pakistan where the Pakistani Taliban subcontract these kidnapping jobs to local criminal gangs in Karachi that operate in the cities where there are people who are more vulnerable or susceptible to being kidnapped, and they're sold off to the groups."

"So ISIS could pay for the individual and then, almost like a commodity, try to make a profit off of them. If it's a journalist, a diplomat, a civilian, whatever," he says.

Max Abrahms, a security analyst at the Council of Foreign Relations, says there are signs the group are under real financial strain. ISIS released more than 200 Yazidi hostages last week, which Abrahms says could be because the terror group could no longer afford to look after them.

"We don't really know why they released those 200 plus Yazidi captives but one explanation is that the Islamic State had to care for them and that they were becoming burdensome to care for," he says.

"I believe the group is struggling more and more financially and that's really important because there is definitely a correlation between the wealth of a group and the amount of bloodshed it's able to inflict."

He adds that the current allied campaign against the group is hitting its finances.

"It's very hard to be successful financially when you're on the run. The Islamic State relies heavily on predation of the population but its not a consistent source of revenue. For example, they stole Yazidi jewellery and now there's no more jewellery."

On Saturday ISIS militants launched suicide attacks and ground fighting operations around Iraq's biggest oil refinery Baiji, 200km north of Iraq. The Iraqi military say the oil field is now back under Iraqi government control.